While details of the preferred-provider agreement vary depending on the sources, GE's director of corporate real estate, Harry Stein, tells GlobeSt.com that the first stage of the agreement, which encompasses roughly 3,000 properties nationally, will focus on leasing transactions. "In this stage, we're concentrating just on transactions," he says. "We're not addressing other services."

The deal includes office and industrial space, medical space and NBC studio space, says David Kontra, manager of operations for GE Real Estate. Details of the recent Vivendi and Transamerica deals were not nailed down in time for inclusion in this agreement, he says.

Stein also revealed that, with the national contract now in place, GE will turn to the creation of a similar structure in Europe. "We hope to have something in place by the end of the year," he reports. Globally, GE has a portfolio with "about 7,500 assets," Kontra estimates.

But other sources say the terms of the contract are actually much broader than those described by the GE executive. While officials from CBRE, C&W and Colliers would not comment on the deal, which was minted this past summer, an independent source, speaking under conditions of anonymity, says the deal is far more encompassing, including facilities and property management, project management, acquisition and disposition, strategic planning and administration of the leasing database. It is "huge," he comments.

A firm like GE "looks for consistency of service rather than approaching each real estate decision on an ad hoc basis," the source states. While outsourcing is often used as a strategy for cost control, Stein explains that in GE's case, the goal was to increase efficiency, not decrease overhead. "You need resources whenever you try to funnel so many facilities through one internal source," he says.

"GE has a very sophisticated internal real estate department," our source comments. "They reserve the right to hold back as much business for themselves as they see fit."

Stein confirmed that the services the three shops will provide will not be doled out on a territorial basis but rather will be assigned by need and the vendors' relative strengths, so it is possible that two of the providers will be working side-by-side in any one of the client's facilities.

While all three firms have national service accounts, the scope of the new GE deal will "test" their limits, our source says. "GE is one of the largest industrial companies in the world," he notes. "It would be tough to find a comparable assignment."

Instant Insights /

GlobeSt.com EXCLUSIVE: Three Shops Land GE's Preferred Provider Contract

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